Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare
ID: 2445050 • Letter: W
Question
Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $26,000 per ton, one-fourth of which is allocated to product X15. 6,000 units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $15.00 each, or processed further at a total cost of $11,000 and then sold for $20.00 each.
A. Should be processed further.
B. Should be sold at the split off point.
Required: Should product X15 be processed further or sold at the split-off point?Explanation / Answer
The product shoud be processed further
Material and Processing cost 6,500 Unit produced 6,000 split off point revenue 90,000 Profit at this stage 83,500 Processing cost 11,000 Total cost 17,500 Revenue 120,000 Profit after processing 102,500